Both the 50 day SMA and 7200 level has been a good resistance for Nasdaq (pic 2 below)
Last week The S&P 500 came to within 4 points of its 200-day moving average, currently around 2,609.
It has now at the end of the week an Accumulation and distribution scale of D. the worst in the scale of A-E is E.
Look at volume – above the last 15 days but it has not budged Thursday and serious plunge on Tuesday. On Friday despite the wonderful slaughter of analysts expectations by AMZN stock.. AMZN actually declined by the end of the day !!
Amazon and Intel staged ugly reversals.
Amazon gapped up 7.9% but then retreated to a 3.6% gain. Intel rose 5.1% and then erased everything to close with a 0.6% loss.
Next The rising 10-year rate is causing the yield curve to steepen. In the past week and a half, the spread between the 10-year and 2-year treasury rates increased by 32% from 0.41% to 0.54%. Investors have been worried about the flattening of the treasury yield curve and the potential for a yield curve inversion (2-year treasury rate greater than the 10-year rate). An inversion of the yield curve has been a reliable signal that the economy is approaching a recession. Investors have also been worried about rising interest rates. (Source of this para and below pic is Delta market sentiment )
Sidelined for now – the picture is getting uglier
Happy weekend from Seoul, South Korea
As observed on April 13th, 2660 is a critical test for S&P. It passed with flying colors on Monday and Tuesday April 16th and 17th. In fact April 17th was a solid gap up (when the market opens well above the previous days price )
Look at the volume of the entire stock market at the bottom of thr above picture. This is the most beautiful pertinent information. Why? This is the sum Total of all actions of the entire 100s of money managers and pension funds and hedge funds. When the market is falling the volume is going up – red lines and when price is rising the volume in blue is not that great.. this last week it went up 80 points and gave back 80 points. So the volatility is still high and it’s up and down
About 47-50 % of S&P stocks are below their 100 day SMA (say there are 100 stocks in entire market 50 stocks are below their price averaged over their last 100 days) – 2nd picture
On Friday the market S&P and NASDAQ price sliced below their 50 day SMA
S&P 500 is back to testing the 2660. It is just a few points above it.
7300 is now shaping up to be solid resistance for NASDAQ
FFTY the 50 top growth stocks – last picture is back down its 10 days SMA (growth stocks are first bought by institutions when the market is healthy).. if growth stocks are not braking out in high volume..the market is not healthy
In the side lines for now. Let it play through.
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howdy folks from Beijing !
On March 20th we had observed in one of the posts that “S&P 500 solidly gave up the 50 Day MA under a clear gap down . Very close to 2700 support The 2800 was a solid resistance. Time to get in sidelines ”
This week Tuesday’s powerful move was masked amid the higher volatility. The Nasdaq and S&P 500 printed price bars that were actually smaller than several others in the past many days.
The March 27 high was easily today in nasdaq
But the S&P 500 is at a critical March 27 and April 5 highs.
Both are below the 50 day SMA ..
2660 is a critical test for S&P (1st chart below ) the advance decline line for S&P is flattening .. volume for S&P has steadily backed off
7050 is critical support for nasdaq
Sidelines for now.. let it play out further
I have noticed a few good folk are starting to follow this blog. So i thought i should clarify in a simple way things i do
- price is the true north star. Everything is reflected in the price. all opinion, hundreds of money managers, their actions and inactions, pension funds, all research all knowledge is finally shown in the overall market price which is S&P index or NADAQ composite. SPY or QQQ ETF. Why is this important? then you don’t have to frantically look for news and CNBC or hot tips and can spend more time with family and friends and meditate and swim or hike a mountain.
- Profit is made by avoiding loss. Loss is defined as ATR – average trading range. any simple chart on yahoo finance you can plot ATR 20 days. First decide how much can you afford to lose. 1 ATR or 2 ATR and so on so forth. If you are wrong just exit. why is this important? Look at the chart below: say you are only willing to lose 8-9 percent of your equity.
why is this important : Consider the math. Say you buy a stock at 50. For whatever reason, it drops 8% to 46 during the next few days. You promptly unload it and move on. To reclaim that loss, you need to make an 8.7% gain on your next purchase with your remaining capital, which shouldn’t be hard to do.
this is our #1 Priority : preserve our capital at all costs. Sell first after a small loss of 8% and then ask questions later.
why ATR : ATR is a measure of volatility. Let the market move up or down which is its nature. that’s what it does. If volatility spikes then be in sidelines till things settle down.
3) If market is in correction stay in sidelines – 3 out of 4 stocks lose money in correction. If a market is in rally then buy top rated stocks breaking out.
When is a market in correction? when 8-9 days of high volume selling in the overall market within a month.
when is the market in rally? Top rated stocks are breaking out in high volume. the great paradox of investing is that the ripest buying opportunities occur right after bear markets when markets have declined 20% or more.